Less controversial budget to challenge Jindal differently
The most remarkable thing about Louisiana’s fiscal year 2015 budget is that it was received almost entirely non-remarkably, despite some spending choices that might have attracted more notice had the state’s funding situation turned out differently.
Perhaps that’s the consequence of a budget that, in operating terms, contains more money than last year’s (as in its posture at the end of 2013) by almost $200 million in state general funds, even as the overall budget was down more in total than that three times because of mainly reductions in federal funding. However, much of that federal dwindling comes from reduced disaster recovery aid. This kind of outcome tends to cut down on the carping, and last week in preemptive fashion the Gov. Bobby Jindal Administration accentuated this by in piecemeal fashion letting out its plans on this largesse, addressing matters that perhaps were not the most pressing but which received the most attention and political pressure on their behalf.
By far the biggest SGF boost came in the area of higher education at $375 million, where an overall operating increase of $141.5 million was announced, with $87.7 million of that coming from tuition increases. Interestingly, the FY totals of total spending are actually several million fewer being spent than last year, but this is because of apparently about $150 million in non-recurring expenditures, much having to do with the transition of medical education largely being done by publicly-run hospitals to now almost exclusively by hospitals (including those owned by the state) run by the private sector. With this greater efficiency, the state will now be spending per student (using fall, 2012 student numbers) about $11,820 compared to FY 2008’s $13,544, or a decline (unadjusted for the changing mix of senior/junior college enrollments) of almost 13 percent per student.
Other increases allowed for permanent raises to both all eligible state employees and, through the Minimum Foundation Program, teachers, and in dollars to fund individuals with disabilities in home- and community-care settings. These also have benefitted from increased efficiencies in implementation, but, along with higher education, benefit from the increased SGF pot from tax amnesty proceeds from this fiscal year as well as from an assumed $100 million from next year. That might be a bit dicey, given the unusual economics with the amnesty concept, and also this regular amnesty use threatens future years’ more predictable revenue flows and thereby budgeting integrity by training larger taxpayers to hold out. This makes especially the state employee raises, which would become a recurring commitment, a questionable choice, especially given the very generous benefits already given to state employees, but after a four-year period where no performance pay raises were given to some state employees, this might have been tossed in there for morale’s sake – especially because both employees and taxpayers will have to suffer increased health benefits costs for these employees. The misnamed Patient Protection and Affordable Care Act will cause a 5 percent increase in these, along with other more minor causes contributing to that.
Nor may the MFP boost be all that wise, but again perhaps triggered by pressure inside and outside of government. In part, this may be a reaction to a suit filed that asserts the state underpaid schools districts as a result of a court decision about that funding mechanism relative to its use in the state’s scholarship voucher program. This also meant that MFP bucks could not be used for the program, so discretion may have been the better part of valor in that holding back on any increase could save money for the future if an adverse court ruling comes down and/or to fund the new statewide program.
Disappointingly, only $25 million was peeled off of nonrecurring revenues produced from the amnesty and elsewhere to pay down the statutory requirement that the state pay back its Budget Stabilization Fund by the end of FY 2016. Given that means the amount owed after this will be in the neighborhood of $300 million, clearly the Jindal Administration believes the gradual upward trajectory of the state’s revenue picture will allow for this next year. Another $14 million goes to slightly dent the ticking time bomb of paying off unfunded accrued liabilities consequent of the overgenerous pension system by 2029.
Of great cheer to some legislators in particular was that not just declared nonrecurring funds were budgeted to nonrecurring purposes, but that “one-time” funds, or money from recurring sources that does not go into the general fund but into others that then are transferred to be spent for general-funded purposes, were kept relatively low as a revenue source compared to recent years. While the House of Representatives faction known as the “budget hawks,” despite caterwauling long and loud about the use of one-time money had little impact except to increase spending, their pressure may have paid off in that the Jindal Administration did not repeat last year’s experiment of using genuinely bonus revenues such as property sales to fund recurring expenses. Whether much squawking occurs about the funds transfers necessary this year remains to be heard. Also encouraging is the continued right-sizing of government, with around 1,000 more positions, essentially all presently vacant, getting lopped off.
Despite these areas of controversy, little criticism came out of official Baton Rouge about the budget, perhaps muted by a collective sigh of relief that continued reductions seem unnecessary in the near future. Jindal has done a very good job in managing spending under these conditions, in part because it gave him a chance to follow his instincts, shaped by both a technocratic outlook and an ideological imperative, that strive for more efficient service delivery and service delivery proportionate to actual needs and priorities. Now the question is whether he can continue budgeting in this direction under less austere conditions, for it is under these circumstances that the typical Louisiana politician’s eyes become increasingly filled with dollar signs, and his mind begins to wander to thinking how he can distribute them to pick up votes in his next election, instead of pondering whether they are needed at all.
Posted by Jeff Sadow at 09:20